Date:27/09/2007 URL: http://www.thehindubusinessline.com/2007/09/27/stories/2007092752601600.htm

Back Enjoy the bull run, but be patient: Motilal Oswal

‘Investors not prompt in selecting good cos at reasonable prices’

Paul Noronha

Stock dealers are delighted as the Bombay Stock Exchange’s benchmark index Sensex crossed the 17,000 mark in Mumbai on Wednesday. —

Adith Charlie

Mumbai, Sept. 26

Bulls are having a ball on Dalal Street of late.

The investment community rode on cloud nine as the Sensex jumped by more than 1,000 pointsin the last six days to kiss the historical peak of 17k, before retreating in late afternoon trade.

In a bid to capture the flavour of the current bull run, Business Line had an e-interaction with Mr Raamdeo Agrawal, Managing Director, Motilal Oswal Securities Ltd. Excerpts.

Do you think that the present bull run will continue in the near to long term?

Right now, we are in the midst of a bull-run.

However, I do not think that the markets can sustain the pace at which the last 1,000 points have come. Hence, I would advise investors to enjoy the bull run, but have patience going forward.

It seems retail investors have not been major participants in the Sensex’s recent surge from 15k to the present levels? Is this a worrying factor?

Investors, in general, have spent too much of time in timing the market.

They have not been prompt when it comes to selecting good companies at reasonable prices and staying invested for 5-10 years.

There is a lot of speculation in the Indian markets, thereby, reducing the benefit of the bull run for the masses. One can do very little about it.

At current P/E valuations of around 23 (for Sensex), do you think our markets are overvalued?

Markets have already discounted the earnings growth of 2007-08.

Keeping in mind the current optimistic mood, the discounting can be much higher in the longer run.

However, it will be difficult to justify higher multiples unless interest rates go significantly down from here.

How is Indian market placed with other emerging markets in terms of P/E?

Every emerging market is different in character.

It will be fair only to compare Indian opportunities with the Chinese markets.

I think our valuations in comparison with China are quite reasonable.

Would you be surprised if the BSE touches 18K this year?